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Federal Circuit Decision Barring Appointments Clause Challenges By IPR Petitioners Becomes Precedent

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On May 5, 2020, the Federal Circuit reissued a previously nonprecedential opinion as precedential that held that inter partes review (“IPR”) petitioners could not benefit from its earlier Arthrex holding to challenge adverse Patent Trial and Appeal Board decisions on Appointments Clause grounds. Ciena Corp. v. Oyster Optics, LLC, No. 2019-2117 (Fed. Cir. May 5, 2020).

In Arthrex, the Federal Circuit held that PTAB’s administrative patent judge (“APJ”) appointments were unconstitutional under the Appointments Clause because APJs were not removable by the USPTO Director. Arthrex Inc. v. Smith & Nephew, Inc., 941 F.3d 1320 (Fed. Cir. 2019). As a remedy, the Court modified the statute to make PTAB judges “inferior officers” removable by the USPTO Director, and ordered a new hearing for the patent owner to be considered by judges subject to the new statute. However, in Ciena, the Federal Circuit held that IPR petitioners could not avail themselves of this remedy. By filing an IPR petition, the petitioners waived any challenge to the authority of PTAB to decide the issues in the petition. In other words, petitioners cannot seek redress from PTAB, only to dispute the Board’s authority to decide the issue if the petitioners obtain an adverse ruling.

The original opinion in Ciena was issued as a non-precedential opinion. However, the USPTO requested that the Federal Circuit reissue the opinion as a precedential order, which it did on May 5, 2020. Accordingly, the Ciena precedent is now binding on future Federal Circuit panels.

What This Means For You

Now that Ciena is precedential, IPR petitioners who received adverse judgments from APJs appointed under the statutory provision held unconstitutional in Arthrex can expect the Federal Circuit to reject any claims that they are entitled to a rehearing on Appointments Clause grounds. Nevertheless, IPR petitioners may want to preserve the issue in case the Supreme Court reviews and reverses Arthrex.

This information is provided by Vinson & Elkins LLP for educational and informational purposes only and is not intended, nor should it be construed, as legal advice.